Not for West Point, but for USAFA, this is a very common thing. It's called the "faculty pipeline" and for us involves getting an MS degree in the field that USAFA needs - so for STEM departments this usually means at AFIT.
It is one of the many options for getting graduate school paid for. If the deal is simply to teach for 3 years, that's pretty good as that would just be one of his assignments. I'm not quite sure what you mean by it extending his time on active duty, unless you mean he was planning to get out and then go to graduate school. Teaching at a service academy is like any other assignment.
Also as an aside - teaching is the best way to learn something, so if the opportunity is to get an MS and then teach in the field your DS wants to eventually work or do research in, it's an amazing opportunity. I'm currently teaching (not at USAFA, but at AFIT) and have many friends teaching at USAFA. I'd imagine it's a similarly awesome assignment at West Point.